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Investing in the Peace: Economic Interdependence and International Conflict

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  • Gartzke, Erik
  • Li, Quan
  • Boehmer, Charles
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    Abstract

    Research appears to substantiate the liberal conviction that tradefosters global peace. Still, existing understanding of linkages betweenconflict and international economics is limited in at least two ways.First, cross-border economic relationships are far broader than justtrade. Global capital markets dwarf the exchange of goods and services,and states engage in varying degrees of monetary policy coordination.Second, the manner in which economics is said to inhibit conflictbehavior is implausible in light of new analytical insights about thecauses of war. We discuss, and then demonstrate formally, howinterdependence can influence states recourse to military violence. Therisk of disrupting economic linkages particularly access tocapital mayoccasionally deter minor contests between interdependent states, butsuch opportunity costs will typically fail to preclude militarizeddisputes. Instead, interdependence offers nonmilitarized avenues forcommunicating resolve through costly signaling. Our quantitative resultsshow that capital interdependence contributes to peace independent ofthe effects of trade, democracy, interest, and other variables.

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    Bibliographic Info

    Article provided by Cambridge University Press in its journal International Organization.

    Volume (Year): 55 (2001)
    Issue (Month): 02 (March)
    Pages: 391-438

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    Handle: RePEc:cup:intorg:v:55:y:2001:i:02:p:391-438_44

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    Cited by:
    1. Shoro Armstrong, 2010. "Interaction Between Trade, Conflict And Cooperation: The Case Of Japan And China," Asia Pacific Economic Papers 386, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    2. Robst, John & Polachek, Solomon & Chang, Yuan-Ching, 2006. "Geographic Proximity, Trade and International Conflict/Cooperation," IZA Discussion Papers 1988, Institute for the Study of Labor (IZA).
    3. Rodolphe Desbordes & Vincent Vicard, 2007. "Foreign direct investment and bilateral investment treaties, an international political perspective," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00176051, HAL.
    4. Leslie Wehner, 2009. "Power, Governance, and Ideas in Chile’s Free Trade Agreement Policy," GIGA Working Paper Series 102, GIGA German Institute of Global and Area Studies.
    5. Dominic Rohner, 2008. "Reputation, Group Structure and Social Tensions," HiCN Working Papers 40, Households in Conflict Network.
    6. Chang, Yuan-Ching & Polachek, Solomon W. & Robst, John, 2004. "Conflict and trade: the relationship between geographic distance and international interactions," The Journal of Socio-Economics, Elsevier, vol. 33(4), pages 491-509, September.
    7. Vincent Vicard, 2006. "Trade, Conflicts, and Political Integration: the Regional Interplays," CESifo Working Paper Series 1839, CESifo Group Munich.
    8. Rohner, D., 2006. "Information, Reputation and Ethnic Conflict," Cambridge Working Papers in Economics 0658, Faculty of Economics, University of Cambridge.

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